Behind the Greek Debt, European liberalism fights for survival

Austerity: The schemes of the ex-Troika have ravaged the Greek economy and made the debt explode, but their proponents refuse to admit their failings. The simple reason: Greece “finds itself at the centre of a conflict between two opposite strategies for the future of Europe”, believes Alexis Tsipras.

Always taboo in the circle of European leaders, the scorecard of austerity policies is, however, well known to the Greeks themselves. It is this scorecard - one of “mistakes [...] dearly paid for by the Greek people”, in the words of Alexis Tsipras in an article published in Le Monde yesterday – which explains a big part of Syriza’s victory. And also the mandate which the Greek prime minister has tried to apply for four months: devoting all his efforts to “ending [the] vicious circle” of austerity by working towards a “new accord to allow Greece to find its way back to the path of growth within the euro with a viable economic program”. The current one imposed by memorandum has left the country drained and choked with debt: 28 percent of Greeks are unemployed (60 percent youth unemployment), half of pensioners live below the poverty threshold... In addition, public debt has exploded from 103 percent to 180 percent of GDP between 2007 and 2014. Meanwhile, successive governments have applied the policies of the ex-“Troika” creditors to the letter.

To get an accurate diagnosis, the president of the Vouli (the Greek parliament), Zoé Konstantopoulou, appointed a “truth commission for the public debt” on 4 April, composed of experts independent of the IMF and European Union’s financial institutions. It has two French members, one of whom, the economist Michel Husson, has already carried out a study on the Greek debt. The results were published in l’Humanité 12 March. These works show “the Vulgate”, that claims that “Greece indulged in an orgy of public spending” and that the deficits were caused by “a bloated administration”. This is “not founded on truth”, commented Thomas Coutrot, ATTAC economist. According to Michel Husson, soaring Greek debt before the crisis was due, in part, to exorbitant interest rates imposed by creditors (reaching 12 to 13 percent at the start of the 90s) and also because of a continual drop in revenue through tax benefits accorded to certain privileged members of society from 2000. In total, these factors were the origin of 56 percent of the Greek debt acquired before the crisis. The debt would only have been 45 percent of GDP instead of 103 percent of GDP in 2007 without them.

Due to this heavy public debt, part of which is judged to be “illegitimate” by the French group Collectif français pour un audit citoyen de la dette publique (CAC), the Troika imposed the austerity measures in exchange for restructuring of the debt in the form of loans (245 billion euros in total). The results of these austerity measures have proven counterproductive. However, its proponents persist in refusing to admit their failings, for one simple reason: Greece “finds itself at the centre of a conflict between two opposite strategies for the future of Europe”, believes Alexis Tsipras. “With this infernal financial device”, explains Left Front deputy François Asensi, the financial oligarchy wished to experiment with neoliberal politics”. Today, the success of Syriza “undermines” these politics and “risks a Europe-wide epidemic”, remarked Pierre Khalfa, of CAC. A scenario which European leaders (chiefly, Angela Merkel) want to prevent. At the cost, if need be, of the “break and eventual split” of the euro-zone, as opposed to a “Europe of solidarity, of equality of democracy”, which Alexis Tsipras calls upon us to choose.